This article is composed by Bogleheads® forum member, digarei.
FOURTEEN (14) persons attended the seventh meeting of the Sacramento Area Bogleheads. We met on Saturday, October 10, 2015 at Aioli Bodega Espanola, 1800 L Street, in Sacramento’s mid-town. After introductions and a brief explanation of the theme and topics to be discussed in the months remaining in 2015, members present made a number of decisions regarding the meeting schedule and other items. Two members made presentations on specific portfolios, dissimilar in approach but complementary in the way either could be adopted by investors as a key component in a long-term buy and hold strategy.
The first item of business was dispensed with quickly. The chapter has met on the second Saturday of each month at 10:30 AM since May, and we expect this to continue in 2016.
We nominated advisor(s) for upcoming changes – the chair predicted that when cooler weather arrives and the group moves indoors, that the noise level, already high when seated on the patio, would be exacerbated by the wraparound glass windows. Hearing an individual seated at the other end of a long table would be difficult, and members would find themselves having to shout to be heard—an untenable situation that, even if tolerated by restaurant personnel, would result in uninspired cacophony. The coordinator recommended that a new venue be sought for meetings to be held during the winter and early spring months, and asked for help in accomplishing this and several other related tasks.
The other tasks identified were:
- Identifying and checking the availability of guest speakers, from here or afar, to address the group on tax management, income streams (including social security) and other subjects as they’re being discussed by the group.
- Procurement (borrow, devise, improvise) and operation of electronic equipment for guest speaker events. We will have a need for someone with technological and facilities expertise to ensure high-quality video/voice connections when we host guest speakers via the internet or at an alternative venue. Note: 1 & 2 were presented as one at the meeting.
- Assisting the coordinator in the planning and development of objectives and topics appurtenant to long-term goals (the product of which could be detailed: time-coded and tested lesson plans, activities and educational goals—or broad outlines for later development that are submitted to members for approval and/or improvement).
Through consensus, balloting and volunteers, two groups were formed to address these tasks.
Regarding meeting notes – it was suggested that this task be shared among the group, each taking a turn for that month’s meeting. One member offered to take notes next month. The coordinator agreed with this suggestion and is prepared to relinquish this task to members who will undoubtedly do a better job in capturing important contributions and insights that too often go unnoted.
In applying electronic arts (since edison) – the chair’s second attempt to record meeting discussions electronically was more successful than the first. The proceedings were recorded in their entirety, an hour and fifty-some minutes of conversation—some of which could be detected beneath or on top of the pulsating drone of the ventilation system, emergency response vehicles and street noise… next month: audio high tech, in the form of an external x-y microphone, will be attempted.
Ever tried? Ever failed? No matter. Try again. Fail again. Fail better.- Samuel Beckett ¹
Portfolio Deconstruction & Theory
In commencement of a series of portfolios that we’ll be discussing – just a few of many good approaches to sound investing – we heard from two members with very different buy and hold investing strategies; both could be characterized as “lazy portfolios”. There were many good follow-up questions (and hand-outs!) ²
- The Permanent Portfolio presentation by l82start
- The Vanguard Balanced Funds presentation by carruthers209
Between speakers, the group discussed this queston: “What makes a good portfolio?”
Some comments from members: “I can think of some really terrible portfolios… such as several equity funds with a lot of overlap or the majority of your investment in a sector-specific fund… like energy. Owning a single stock (AAPL) or (within a 401(k) plan) having 80% of one’s holdings in your employer’s stock. Don’t take investing advice from a taxi driver or from a co-worker.
“a good portfolio conforms to the plan you have set up in advance… (according to your) Investment Policy Statement (IPS)… Money is personal and it’s important to know yourself in defining your goals and risk tolerance. ‘Know thyself.’ Educate oneself. One measure might be to compare your own portfolio to a model portfolio such as Vanguard’s Balanced Index Fund. test it: check the growth of $10,000 from 1995 until today against the Balanced fund and see what the result is…”
Following the presentations, some excerpts were read from “I don’t know and I don’t care“, an article by financial columnist Jason Zweig.
We left a challenging question on the table due to time constraints:
“Does having many asset classes create outperformance?”
This question will lead off next time. A few articles that may provide illumination on this question:
- ASSET ALLOCATION: MANAGEMENT STYLE AND PERFORMANCE MEASUREMENT by William Sharp, 1992
- One Portfolio For Asset Allocation by Thomas Smith, investopedia
Next meeting: November 14, 2015 … a portfolio presentation and an overview of lazy portfolios.
¹ Beckett (playwright b. Ireland 1906 d. 1989), Worstward Ho, 1983. Conveniently abstracted without concern for context.
² At least one member felt that speakers should have been allotted more time to fully explain the portfolios, specifying certain items that may have been overlooked that could prove helpful to members gathering information. So to assist future speakers, we’ll draw up some simple bullet points and extend the time a bit. Thanks!